Telogis Inc. last week ranked 110th out of 118 firms on the Business Journal’s list of largest OC-based private companies, with about $111 million in revenue last year.
Three days later the Aliso Viejo-based maker of software that helps companies manage vehicle fleets agreed to be acquired by Verizon Communications Inc. in a deal expected to close by year-end.
New York-based Verizon, whose 2015 revenue was more than $131 billion, is 1,200 times larger than the software maker.
A purchase price wasn’t disclosed, though industry sources suggest a sale price for software-as-a-service firms at Telogis’ revenue level and growth rate—even in a weaker market for such acquisitions recently—could top $1 billion.
Telogis said its revenue climbed 25% last year, and a technology news website said the firm’s growth curve points to about $150 million in revenue this year.
Business Journal research suggests a sale-price-to-revenue multiple of between five and eight for a company well beyond startup stage and reporting revenue.
That points to a Telogis sale price of $750 million to $1.2 billion based on 2016 revenue and the potential multiple.
Other factors include how much Verizon wanted Telogis—and who else might be waiting in the wings. The telecommunications company hasn’t given specific reasons for pursuing the deal.
Competitive Markets
Telogis’ logistics software clients have included Ford, General Motors, Isuzu and Volvo trucks, and Manitowoc Cranes.
Applying technology to logistics is considered a way to save money and protect assets, from individual company cars to convoys of heavy trucks.
Telogis also had signed deals in 2015 with Apple and AT&T to work on the technology side of the equation.
The Apple deal was for vehicle- and work-force-related apps for iPhones and iPads. The AT&T work was to improve vehicle and work force connectivity and security for the telecommunications firm’s corporate clients.
Apple, AT&T and Verizon compete across several segments. In 2013 Verizon lost to AT&T its longtime contract with General Motors for the car maker’s OnStar vehicle navigation and management system. It’s unclear if last week’s deal would affect Telogis’ work with General Motors that involves integration of its software into OnStar.
Verizon’s telematics services for people and businesses include its Hum after-market subscription service that’s similar to Telogis’ products, and industry analysis on the Telogis purchase indicated Verizon was motivated by the size and scope of the software maker’s contracts and offerings.
Growth Trajectory
Telogis was founded in 2001 by Jason Koch, Ralph Mason and Newth Morris.
It reported its first funding—$2 million—in April 2009 and added $6.3 million over the following two years.
It bought six fleet-management firms between 2009 and 2012 that provided mapping, routing, location and tracking of vehicles for small and mid-sized business clients and in niche industries, including construction.
Telogis later secured $118 million in venture capital funding from Kleiner Perkins Caufield & Byers and investors connected to Ford and General Motors.
It considered an initial public offering.
“An IPO is certainly an option for us,” Morris told the Business Journal in October. “We are constantly evaluating financing options and market conditions.”
Telogis’ offices in California, Texas, Canada, England, Australia, New Zealand, Brazil and Mexico employed 716 as of Dec. 31, including 147 in Orange County. It was the 15th largest software company based here.
Telogis is expected to maintain its OC operations as part of Verizon. Neither company commented further.
The Business Journal last year named it the technology “company to watch.”
CoStar Group Inc. records show Telogis occupies 56,000 square feet at 20 Enterprise Drive in Aliso Viejo in a lease that runs through October 2018.
